What is Curve?
Decentralized crypto -rope Curve Finance was created by Mikhail Egorov. Earlier, he graduated from the Moscow Physics and Technical Institute, received a doctoral degree in physics at the Swinburn Technological University, worked on research related to quantum calculations and cryptography, and was the co-founder https://gagarin.news/news/georgias-national-wine-agency-is-using-the-cardano-blockchain-to-ensure-the-quality-and-control-of-the-logistics/ of the NuchiPher financial company and the Loancoin project.
In November 2019, Yegorov published a technical document, which described an effective mechanism for creating Stableswap liquidity for the trade in stablecoins.
The Curve Finance exchange, in which the specified approach was implemented, was launched in January 2020. The project team is based in Switzerland. According to the founder, as of mid -2020, in addition to him, there were only five people, of which two developers.
How Curve works?
As in other AMM-dex, Asset trade in Curve Finance is based on liquidity bullets. These are smart contracts, containing two or more assets in equal shares that users can automatically exchange through a simple interface, connecting using any Web3-wallet.
Relative assets prices are calculated according to the mathematical formula, and the size of slipping (price changes) during exchange is inversely dependent on the size of the pool.
One of the first launched pools was 3Pool, containing in equal shares of DAI/USDC/USDT. Later, pools appeared for the exchange of other stablecoins (Busd, TUSD, HUSD, USDN) and adjusted wrapped tokens like WBTC/Renbtc.
For each exchange for the platform, a commission is charged (0.04% of the volume of the transaction), part of which is distributed between liquidity suppliers. Add your assets to the pool and any user can receive a share of fees. Since August 13, 2020, liquidity suppliers also receive an additional reward in the form of CRV tokens.
In June 2021, the second version of the protocol was launched – Curve V2. It added the possibility of exchanging between unfinished assets. In particular, the Weth/WBTC/USDT pool launched.
The new version also introduced the function of automatic concentration of liquidity around the current price. Due to this, users were able to exchange large amounts with minimal slip.
How is Curve tocenomics arranged?
Curve Finance has an ERC-20 CRV CRV control tox released on Ethereum. The main purpose of CRV is to stimulate liquidity suppliers through profitable farming, as well as the involvement of users in making decisions related to the protocol.
CRV was launched on August 13, 2020, but not the way the Curve team planned. The program code was previously posted on the GitHub service, which the anonymous developer used to independently deploy a token smart contract.
Since the launch went without any mistakes, the project team was forced to recognize it by official.
The maximum CRV proposal is 3.03 billion tokens, which should be distributed by August 2026 as follows:
- 62% of liquidity suppliers;
- 33% team and investors;
- 5% in Curve DAO reserve.
The rate of token emission is reduced by about 30% every year. After the first reduction in August 2021, it is about 633,126 CRV per day.
Tokens holders can use them in three ways:
- vote for offers in Curve DAO;
- participate in stakeing and receive 50% of the commission commission;
- increase to 2.5 times the profitability when providing liquidity.
All three functions require CRV blocking for a period of 1 week to 4 years. In return, VECRV deposit tokens are issued. Moreover, when blocking for 1 year, the owner receives only 0.25 VECRV for 1 CRV. Only by blocking CRV for the maximum period of 4 years can I get VECRV in relation to 1: 1.
As of mid -2022, about 47.6% of CRV tokens, in circulation, were blocked. The token is included in the top 100 by market capitalization and is traded on most of the largest crypto-streaks.
How Curve is controlled?
All issues of the development of the Curve Finance protocol are resolved through the autonomous organization Curve DAO, which was launched immediately after the start of the emission of CRV token in August 2020.
To take part in Curve DAO, users need to block their CRV for a period of 1 week to 4 years and get VecRv.
If there are 1 VECRV, you can vote for existing sentences or create “signal votes” that allow you to determine interest in any issues from the community.
The presence of at least 2500 VECRV provides an opportunity to put forward new offers, for example, to open new and closing irrelevant pools or redistribute awards between them.
Each vote lasts one week. In order for the proposal to be accepted, at least 30% of existing VECRVs should participate in the vote, of which at least 51% should support it. In accordance with Curve DAO solutions, the Curve Finance command makes changes to DEX operation parameters.
Most of the votes in Curve DAO belongs to three Defi protocols (Convex, StakeDao and Yearn), which built their strategies for earnings on profitable farming, providing liquidity and earnings of trade commissions, as well as CRV.
How Curve is developing?
Since the launch of Curve Finance profitable farming has become one of the most successful Defi protocols both in blocked liquidity and trade turnover.
At the peak of popularity in January 2022, it exceeded $ 24 billion, and the monthly trading volume amounted to more than $ 6 billion. But even after the collapse of the cryptocurrency market, by mid-2022, Curve continues to remain in the top five leading Defi services with the volume of blocked funds over $ 5.7 billion.
The huge amount of liquidity provided by Curve allows many other Defi services to use its pools in their ecosystems. In particular, Curve Finance is integrated with the 1inch liquidity aggregator, as well as with the largest landing protocols AAVE and Compound.
In the 2021-22 years, the Curve protocol, in addition to the Ethereum blockchain, was deployed in 9 EVM -compatible networks: Arbitrum, Aurora, Avalanche, Fantom, Harmony, Optim, Polygon, XDAI and MOONBEAM.
The popularity of Curve and the open code of the protocol led to the appearance of several forks (copied protocols). The largest of them are Ellipsis Finance based on BNB Chain and Kokonut SWAP on the Klaytn network.
Paying great attention to the safety of smart contracts and the convenience of users, the Curve platform remains one of the most useful tools for decentralized trade in low-slip stiblcoins and commissions.